Stock Returns Portfolio Returns Year North Air West Air Tex Oil 2010 20% 10% -3% 15.0% 3.5% 2011 30% 20% -6% 25.0% 7.0% 2012 7% 7% 10% 7.0% 8.5% 2013 -6% -3% 20% -4.5% 8.5% 2014 -3% -6% 30% -4.5% 12.0% 2015 10% 30% 7% 20.0% 18.5% Average Return 9.7% 9.7% 9.7% 9.7% 9.7% Volatility 13.7% 13.7% 13.7% 12.5% 5.1%
Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Stock Returns Portfolio Returns North Air 20% 30% 7% Year 2010 2011 2012 2013 2014 2015 Average Return Volatility -6% West Air 10% 20% 7% -3% -6% 30% 9.7% 13.7% Tex Oil - 3% -6% 10% 20% 30% 7% 9.7% 13.7% 3 (Rn+Rw) 5 (Rn+RT) 15.0% 3.5% 25.0% 7.0% 7.0% 8.5% - 4.5% 8.5% - 4.5% 12.0% 20.0% 18.5% 9.7% 9.7% 12.5% 5.1% -3% 10% 9.7% 13.7% You are examining a portfolio consisting of 3 stocks. Using the data in the table B a. Compute the annual returns for a portfolio with 20% invested in North Air, 25% invested in West Air, and 55% invested in Tex Oil. b. What is the lowest annual return for your portfolio in part (a)? How does it compare with the lowest annual return of the individual stocks or portfolios in the table above. a. Compute the annual returns for a portfolio with 20% invested in North Air, 25% invested in West Air, and 55% invested in Tex Oil. The annual return for 2010 will be: (Round to two decimal places.) Year North Air West Air Tex Oil Portfolio 2010 20% 10% -3% The annual return for 2011 will be: (Round to two decimal places.) % Year North Air West Air Tex Oil Portfolio 2011 30% 20% -6% The annual return for 2012 will be: (Round to two decimal places.) % Year North Air West Air Tex Oil Portfolio 2012 7% 7% 10% The annual return for 2013 will be: (Round to two decimal places.) North Air Portfolio Year 2013 West Air -3% Tex Oil 20% -6% The annual return for 2014 will be: (Round to two decimal places.) Portfolio Year 2014 North Air -3% West Air -6% Tex Oil 30% The annual return for 2015 will be: (Round to two decimal places.) Year North Air Portfolio West Air 30% Tex Oil 7%. 2015 10% b. What is the lowest annual return for your portfolio in part (a)? How does it compare with the lowest annual return of the individual stocks or portfolios in the table above. (Select all the choices that apply.) D A. The portfolio computed in part (a) had its lowest annual return in 2010 (4.85%). O B. The portfolio computed in part (a) had its lowest annual return in 2011 (7.70%). OC. This is lower than each individual stock and the other portfolios in the table above as well. O D. This is higher than the lowest annual return of each individual stock and the other portfolios in the table above as well
